This blog is about macro-economics, financial markets and the world that has been pulled over your eyes to blind you from the truth.

— Neo: What truth?
— Morpheus: That you are a slave, Neo.

2009-09-29

When contrarians become contrarian indicators

It looks like all the contrarians have turned bullish on stocks, for various reasons. But when contrarians draw the same conclusions as mainstream, they are not contrarians anymore, they become merely contrarian indicators for true contrarians. And there aren't so many of this latter kind left (Robert Prechter and Jim Rogers being the mainstream contrarians not to have fallen into the trap so far).

- Marc Faber, my hero, is forecasting Armageddon but still suggesting to buy stocks (though for his defense, his forecast is for the next 5 to 10 years, not short term).

- Bill Fleckenstein (who I highly respect) is extremely bullish on Gold and also thinks super-inflation is around and hence he doesn't want to fight Bernanke's printing presses.

- Jim Grant (highly notorious, but I don't like he's positions) has turned from a perma-bear to a bull after a 60% rally in the markets

As Bill Bonner put it in a recent post, "even before the rally began, Prechter foretold its story" :

“Regardless of extent, it should generate feelings of optimism. At its peak, the President’s popularity will be higher, the government will be taking credit for successfully bailing out the economy, the fed will appear to have saved the banking system and investors will be convinced that the bear market is behind us.”